Berlakovich blocks possible cutbacks

The pressure is increasing on People’s Party (ÖVP) Environment Minister Nikolaus Berlakovich as he keeps refusing to reduce spending on the agricultural sector.

The environment and agriculture minister claimed yesterday (Tues) subsidies on the domestic agricultural industry were ensuring farmers’ existence. He warned that cuts could ruin the Austrian agricultural sector. His appeal comes after the European Commission (EC) declared its intention to examine the amount of spending on major farming companies more critically.

EC officials promised that small businesses of the sector in the European Union (EU) would continue to strongly benefit from subsidies. European Agriculture Commissioner Dacian Ciolos underlined that financial support for agricultural companies would soon depend more strongly on their eco-awareness.

The ÖVP plans to reduce the state’s overall spending on the public and private sector by around 15 per cent in the next five years. Austrian companies, cultural initiatives and events received 18.5 billion Euros from the state in 2010. Long-term investigations by economic research groups show that the alpine country spent 15 billion Euros on average in the past years.

The Social Democrats (SPÖ), who form a government coalition with the ÖVP, generally approve attempts to restructure Austria’s system of subsidies. However, the party of Chancellor Werner Faymann is also pushing for tax increases. Higher taxation of assets, real estate deals and inheritances will be of great help in restoring the budget in the coming years, according to the SPÖ.

The ÖVP is especially targeting Federal Railways (ÖBB) in its appeal for efficiency. The state-funded railroad company managed to lower its annual loss from 330 million to 28 million Euros in 2011. SPÖ Traffic Minister Doris Bures recently announced that ÖBB staff would not be allowed to retire before the regular pension age any longer, with the exception of seriously ill workers. ÖVP chief Michael Spindelegger appreciated the news but is nevertheless determined to dramatically slash subsidies for ÖBB by 2017.

The Labour Chamber (AK), which is dominated by SPÖ officials and unionists close to the left-wing party, called on the coalition to reconsider tax privileges of farmers. The institution warned about increasing charges and taxes which would mean further pressure on labourers and the middle class. AK leaders said they supported Faymann’s campaign for a tax on financial transactions.

The SPÖ chairman, who met with German Chancellor Angela Merkel last week to discuss the issue, said introducing the levy in all European Union (EU) member countries would be ideal in his opinion. Merkel is in favour of the measure as well. Nicolas Sarkozy, the president of France, even revealed he was ready to set up the tax only in France if other members of the EU and the Eurozone – the group of 17 EU members which use the Euro – failed to follow.

The Economy Chamber (WKO) and the Austrian Federation of Industries (IV) said any kind of new taxation measures or tax hikes would harm Austria’s position in international competition. The institutions claimed that the performance of the domestic economy would not be affected if the public sector spent a few per cent less than initially planned in the next few years. WKO and IV said such a move would significantly lower the state debt. Austria’s rising debt was one of the crucial reasons behind Standard & Poor’s (S&P) recent downgrade of the country from AAA to AA+.